Professional Indemnity Insurance Frequently Asked Questions

Administration Fee
Barrister Insurance
Census Date
Claims
Contributions
Consultant Contribution
Disputes regarding the PII contribution
Excess
Exemptions (Applications for)
Low Income Sole Practitioners Contribution
Non-payment of PII by 30 June 2018
Practising Certificate Categories and contribution payable
Pro-rated Contributions
Refunds
Supervised Practice and Contribution payable
Top Up insurance 

 

Administration Fee

Q: How much is the Administration Fee for 2018/19?
A: The Administration Fee for the period of insurance is the total amount calculated by multiplying $500.00 plus application GST of $50.00 by the number of persons who are an Associate of the Law Practice and either a Legal Practitioner or a Conveyancer as at the Census Date.

Q: What is the Administration Fee for?
A: The Administration Fee is a separate charge, in addition to the contribution to the Professional Indemnity Fund, and it is collected by the Law Society as income to the Law Claims budget (see Annual Report).

Q: If I commence a new practice or mode of practice (eg. from private practice to a Barrister or starting a new practice) within the policy year is the Administration Fee pro-rated?
A: No.

The Administration Fee is:

  • Authorised by the Scheme document in clause 15 of the General Scheme Provisions.

    A Practitioner or Conveyancer who is liable to contribute to this Scheme must on or before a date notified by the Society, which date may be prior to the commencement of the Period of Insurance, pay an administration fee to the Society as the Society may, in its absolute discretion determine which fee is not refundable in whole or in part.

  • Charged at a flat rate for every legal practitioner who is liable to contribute to the Scheme – effectively every legal practitioner for whom there is a charge of a contribution.
  • Able to be paid by the Law Practice by virtue of clause 12.2 of the General Scheme Provisions.,/li>
  • Paid to the Law Society, Law Claims account and not paid into the Professional Indemnity Fund.

 

Barrister Insurance

Q: If I leave private practice or employment as “in house” or government solicitor and wish to commence practice as a Barrister am I required to contribute to the scheme?
A: Yes, because your practice as a Barrister will be a new legal practice.

A new Law Practice created after the Census Date in circumstances where no contribution had been payable will require a new Certificate of Insurance and a contribution to be paid. For example:

  • If a second year practitioner is associated with Firm A at the Census Date but resigns employment at the end of the period of Restricted Practising Certificate and commences a new sole practice then that new Law Practice will need to pay a contribution and have issued a Certificate of Insurance in the name of the Law Practice
  • If a Crown Law practitioner as at the Census Date commences as a Barrister subsequent to the Census Date then a new Law Practice is created and an additional contribution will be required.

 

Census Date

Q: What is the Census Date?
A: The contribution payable by each Law Practice for the purposes of the Period of Insurance commencing 1 July 2018 is determined according to the records held by the Society as at 10 May 2018 ("The Census Date").

Q: Do I get a refund for my employee if they leave at any stage after the Census Date?
A: No. A premium contribution is required for an employed legal practitioner who leaves after the Census Date.

Q: Do I have to pay a premium for an employee if they start after the Census Date?
A: No. You do not pay a premium contribution for any employed legal practitioner with a current practising certificate you employ after the Census Date

Claims

Q: What is required in the event of a claim?
A: For information on the claims process please click here or contact Law Claims on; 

Telephone: (08) 8410 7677
Facsimile: (08) 8231 7798
email@lawclaims.com.au

Contibutions

Q: How much is the Base Insurance Contribution for 2018/19?
A: The contribution payable (excluding GST) is determined as a percentage of $2,550.00 ("the Base Contribution") plus applicable GST as follows:

Barristers
If the Law Practice is a sole practitioner and the Practitioner conducts Legal Practice as a Barrister, (as defined in the Scheme) the contribution shall be 20% of the Base Contribution.

Sole Practitioners other than Barristers
If the Law Practice is a sole practitioner (but not a Low Income Sole Practitioner) the contribution shall be 100% of the Base Contribution.

 

Consultant Contribution

Q: If I employ a consultant, are they covered under my Law Practice PII Policy?
A: The title "consultant" is used in many different contexts by legal practitioners and does not necessarily refer to an independent contractor who is providing consultancy services to the Law Practice. Under the SA PII policy, a consultant who is determined by us to be an employee of a Law Practice is covered, whereas an independent contractor is not.

Typically, an independent contractor will be an individual who is not supervised, whose contact with clients is not controlled and whose work is not authorised by the principals or management of the Law Practice.

For further information as to the determination of whether a "consultant" is an employee or an independent contractor, refer to Form S on the Law Society website click here.

Q: Does my Law Practice have to pay a contribution for consultants?
A: Yes, unless the consultant is an independent contractor. The contribution is calculated for each Law Practice according to size (by "associate" numbers) of the Law Practice, as a basis for the approximation of the risk of claims arising from the conduct of the Insured’s Legal Practice.

Each legal practitioner will be “associated” with one Law Practice, but may be associated with more than one Law Practice.

Q: Is a contribution payable for a legal consultant with a current practising certificate?
A: Yes, in order to hold a current practising certificate a legal consultant must have PI insurance, so a contribution is due.

 

Disputes regarding the PII contribution

Q: I disagree with the calculation of the PII contribution for my practice A: If you believe that the contribution payable is incorrect contact Lawguard Management Pty Ltd (via Geoff Thomas, Director Law Claims, GPO Box 2253, Adelaide SA 5001 or DX 400, ADELAIDE or gthomas@lawclaims.com.au) in writing setting out the basis of the disagreement. Please note the contribution must be paid in full by 30 June 2018 and disputes may take time to be addressed. It is recommended that the practice makes payment in full of the contribution that has been billed and in the event an adjustment/refund is resolved by Lawguard Management Pty Ltd a refund would be sent in due course.

Bear in mind however, that paragraph 4 of the Legal Practitioners Professional Indemnity Insurance Scheme Guide 2018/2019 (“The Scheme Guide”) states: 

The contribution payable by each Law Practice for the purposes of the Period of Insurance commencing 1 July 2018 shall be determined according to the records held by the Society as at 10 May 2018 ("The Census Date").

The PII Scheme contribution to be paid by a Law Practice with respect to the 2018/2019 period is calculated having regard to the number of legal practitioner and conveyancer associates (including any external consultants) who, on the relevant Census Date, provide legal services to clients of the practice under the practice name. The PI Insurance is a per practice policy and does not move with an individual practitioner should they move firms. In the event a practitioner joins a practice after the Census Date there will be no additional contribution payable by that practice, because that practitioner will be covered by the existing policy of that practice.

 

Excess

Q: In the event of a claim what is the excess payable by the practice?
A: The excess is stated on the Law Practice's Certificate of Insurance. To access a copy of the Certificate of Insurance please visit the Law Society’s website, by clicking here.

 

Exemptions (Applications for)

Q: Can I arrange my own insurance and apply for an exemption from my obligation to insure with the SA PII Scheme?
A: All legal practitioners wishing to hold a South Australian practising certificate and engage in private legal practice in South Australia (with the exception of those eligible for exemption under the Legal Practitioners Act 1981) are required to hold professional indemnity insurance with the Law Society of South Australia. The Society has developed an Exemption Protocol. A copy of the Protocol is available by clicking here.

 

Low Income Sole Practitioners Contribution

Q: How much is the 2018/19 Insurance Contribution for a Low Income Sole Practitioner?
A: If the Law Practice is a Low Income Sole Practitioner:

  • the contribution shall be 20% of the Base Contribution in the event that the Gross Fee Income of the Practitioner in the Period of Insurance does not exceed $25,000; or
  • the contribution shall be 50% of the Base Contribution in the event that the Gross Fee Income of the Practitioner in the Period of Insurance exceeds $25,000 but does not exceed $50,000.

Q: How do I calculate my gross fee earnings to take advantage of the lower contribution for Low Income Sole Practitioners?
A: Clause 4.23 of Schedule 4 of the Scheme documents provides that: "Gross Fee Income" in relation to a Practitioner, means the gross income earned by the Practitioner from Legal Practice (including income derived by a service administration or trustee company or trust insofar as its activities relate to the Practitioner's practice except any such income derived from the Practitioner or a practice of which he or she is a partner or director), but does not include –

(a) Income derived by a company from the investment of money;
(b) Salary or wages earned by a Practitioner in relation to his or her employment by any other Practitioner; or
(c) Fees or other income earned by a Practitioner who is a director or Employee of a Practitioner for which he or she is liable to account to his or her employer.

The Society interprets this as being the amount of gross income disclosed on your tax return for the relevant financial year, noting that deductibles, and all business and overhead expenses are irrelevant. To apply for a reduced contribution, use Form E on the Law Society website: click here.

Q: What if I am a low fee earner or starting up a practice for the first time where I employ other practitioners?
A: The low fee income concessional contribution is restricted to sole practitioners without employee practitioners.

 

Non-payment of PII by 30 June 2018

Q: If I am absent or on leave at PC and PII renewal time and/or I am unable to pay the PII prior to close of business on 30 June, what is the impact on me and/or my Law Practice?
A: Section 52 of the Legal Practitioners Act 1981 (SA) (“LPA”) requires all local practitioners exercising a right of private practice to be insured under the Scheme. The Act provides for the suspension of any Practising Certificate in respect of any practitioner who has failed to obtain insurance and who is required to be insured.

If the Law Practice has not made payment of the relevant PII contribution by 30 June 2018 none of the practitioners/associates in the Law Practice are permitted to practise on 1 July 2018 or thereafter. The Practising Certificates will not be issued until the payment of the relevant contribution has been paid in full.

Practising Certificate Categories and Contribution Payable

Q: Do the new practising certificate categories have any impact on the contribution payable?
A: On 15 December 2015 changes were made to the LPEAC 2004 Rules introducing s.3B – Categories of Practising Certificates.

The introduction of the practising certificate categories has no effect on the contribution payable for the purposes of the 2018/19 PI Insurance policy year.

To access the changes that were made to the LPEAC 2004 Rules please visit this link; http://www.courts.sa.gov.au/ForLawyers/Pages/Admissions.aspx

Q: Do I pay a premium contribution for a trainee or graduate solicitor?
A: No. You only pay for an employee with a current practising certificate. If a trainee or graduate solicitor does not have a current practising certificate no contribution is due.

Pro-rated Contributions

Q: If I commence a new practice or change my mode of practice (eg. from being a solicitor in private practice to a Barrister or starting a new practice) within the policy year is the contribution pro-rated?
A: No, if before 31 December. The Scheme documents provide that the Contribution payable by a Law Practice is calculated as the sum of the Base Contribution multiplied by the number of practitioners associated in the Law Practice on the Census Date excluding practitioners with a Restricted Practising Certificate and excluding any Interstate office.

If after 1 January and not a Low Income Sole Practitioner or Barrister, the contribution will be pro-rated by 50%.

However, the Administration Fee is a separate charge, in addition to the contribution to the Professional Indemnity Fund, and it is collected by the Law Society as income for the Law Claims budget – see Annual Report. The Administration Fee is charged at a flat rate for every legal practitioner who is liable to contribute to the Scheme – effectively every legal practitioner for whom there is a charge of a contribution. (see clause 15 of the General Scheme Provisions.)

Q: If I employ a new practitioner after the Census Date is there an additional contribution payable in the policy year?
A: No. Paragraph 11b of the "Guiding Principles" provides that:

A Law Practice may engage a new practitioner during the year in circumstances where no contribution had been paid for that practitioner. For example a second year practitioner employed by Firm A at the Census Date may commence employment with Firm B during the third year of practice – but no additional contribution is required as the Law Practice has paid its contribution for that year. 

Refunds

Q: If I cease Sole Practice within a policy year am I entitled to a refund?
Q: If a legal practitioner, conveyancer, or associate leaves the Law Practice within a policy year is the practice entitled to a refund from the Society?
Q: If a legal practitioner, conveyancer, or associate leaves the Law Practice within a policy year is the practice entitled to a refund from the practitioner’s new employer?
Q: If a legal practitioner, conveyancer, or associate leaves the Law Practice within a policy year is the practice entitled to a refund from the practitioner? 

A: No, to each of these 4 questions. Paragraph 9 of the "Guiding Principles" states:

The Policy of Insurance is a claims made and notified policy and provides cover for claims and circumstances giving rise to a claim made against the Insured notified at any time during the policy year. Because there is ongoing cover for claims and circumstances notified at any time during the policy year, even after the cessation or change of mode of practice by the Insured, no refunds by the Society of contributions are payable to an Insured. 

Note that the indemnity provided by the Scheme continues to be available to Insureds whether they continue to conduct Legal Practice or not. Further, Part of Cl.13 of the General Scheme Provisions itself provides: Payment of Contributions 13.2 – New Law Practice A Law Practice that first commences to conduct Legal Practice during the Period of Insurance shall be liable to pay a contribution in such amount as determined by the Society. 13.3 – Entitlement to a Refund There is no entitlement to a refund of the contribution paid under this Scheme (in whole or in part) whether resulting from a change in the mode of Practice of an Insured or otherwise.

Supervised Practice and Contribution Payable

Q: How much is the Insurance Contribution for Restricted Practising Certificates?
A:

  • no amount shall be payable in respect of a Legal Practitioner with a Restricted Practising Certificate who is in the first year of supervised practice;
  • 50% of the Base Contribution shall be payable in respect of a Legal Practitioner with a Restricted Practising Certificate who is in the second year of supervised practice.

Top Up Insurance

Q: Can the Law Practice purchase ‘Top-Up’ insurance from the Society?
A: Law Practices may wish to take out ‘Top-Up’ insurance to increase the amount of cover provided by the Scheme (currently $2,000,000 inclusive of defence fees per claim), however, the Society does not provide 'Top-Up' insurance. You are welcome to contact the Society’s brokers, Arthur J Gallagher. They are able to provide advice on, and arrange, Top-Up Professional Indemnity Insurance. Arthur J Gallagher holds an Australian Financial Services Licence (AFSL 227017). Contact Will Laundy at Gallagher on (08) 8172 8000 for further information. There is however, no requirement to use any particular broker or insurer for this purpose.